Want to Keep More of Your Money? Here’s What Not to Do

Here are nine scenarios in which it’s easy to overpay, get scammed, or come out on the losing end of negotiations. Don’t … borrow to pay for luxuries and splurges.
And yes, that includes using a credit card when you can’t pay off the balance in full—because if this is how you operate, you’re basically taking out a loan whether you think so or not, and the terms of the loan are pretty awful. Liz Weston says that the only luxuries you should buy are ones you can pay for in cash. The problem, Weston says, is that we often confuse wants with needs, as in the example of installing a swimming pool in the house:

We go pretty quickly from “Hey, a pool might be nice” to “A pool would help us create great family experiences” to “We must have a pool for the good of our family!” Once you convince yourself you “must” have something, it’s easy to take the next step to justify taking on debt to purchase it.

Don’t … haggle without considering the other side of the equation.
Over a series of days, an Oprah writer took her best shot at haggling for deals everywhere she went, and for the most part, she failed. Why? For one thing, she tended to ask for discounts after services (at hair salons and restaurants) had been rendered—when salespeople and managers have little incentive to bother knocking down the price. But in a larger sense, she approached negotiations in the wrong way, without really considering how the other side of the negotiation table would benefit by cutting a deal. As one of the story’s expert sources, Daniel Shapiro of the Harvard Negotiation Project, explained:

“People often see negotiation as adversarial; I see it as a shared problem … Both sides need to have their interests met.”

“In order to sell today, the price of a home must be compelling, not just competitive.”

“It’s important to be the best deal in the neighborhood. You don’t want to be the last on the block to lower a price.”

“Home selling today is a price war and a beauty contest. You have to win both to sell.”

Don’t … get screwed by unscrupulous home repair services.
The NY Times lists some of the common scams, including chimney sweeps who offer a cheap price for a cleaning and then upsell you on unnecessary new liners or caps, contractors who say you need a new drain and rebuilt basement walls when the water problem downstairs could be addressed by unclogging the gutters or some landscaping, and air duct cleaning companies that, after a rudimentary inspection, tell the homeowner it’s going to cost a fortune to deal with the obvious mold problem. The truth is:

“You can’t just look at something and know 100 percent that it’s mold,” said John M. Schulte, executive director of the National Air Duct Cleaners Association, a trade group.

By connecting accounts, you can avoid fees for careless errors, such as when you overspend by $5 at the grocery store and get hit with a $35 overdraft charge. If you connect your checking account to a credit card or savings account, you’ll pay a fee to transfer money from savings to checking when necessary, but it will be a lot less than the standard overdraft charge for so-called automatic overdraft protection.

Don’t … take out an auto-title loan.
The “deal” is: When you can’t keep up with the loan payments, the lender takes your car. According to the WSJ, the terms of these loans are often so bad that several states have outlawed them:

Many states have banned auto-title loans historically by capping the interest rates that can be charged at relatively low levels or through other restrictive laws. The new batch of states cracking down on the lenders—which often charge triple-digit interest rates—comes as more cash-strapped borrowers turn to the industry amid economic hard times.

Don’t … get suckered into an Internet car sale scam.
Scammers who recently posed as Memphis-area car dealerships managed to sucker nearly 1,000 consumers into giving up personal information, and as a result some people lost as much as $5,000 due to identity theft. FreeShipping’s Go Frugal blog lists 10 tips to avoid such a scam, including:

Check Car Type and Dealership: Most scammers claim to deal in repossessed and used cars, making extreme discounts seem more plausible. They also target locally-owned dealerships that are easy to imitate and, in turn, hard for you to verify. With the Memphis scam, people from a slew of different states bought cars they only saw over the Internet. Try and buy in-state from a lot you can visit personally.

Don’t … leave unclaimed money unclaimed forever.
A Get Rich Slowly post lists all sorts of unclaimed property (forgotten savings accounts, uncashed paychecks, safe deposit box contents) that may have been owned by your relatives—and that you are now entitled to. Among other resources and tips, the post provides links to every state’s department of unclaimed money and unclaimed property.

Don’t … pay medical bills without first asking for a deal.
You get a bill from a doctor or hospital, and you pay it, right? Wrong. Consumerist writer Phil Villarreal, via the Bucks blog, suggests the stunningly simple—and effective—act of calling up and asking for a deal:

“Hey, my friend told me that if I offer to pay the bill in full over the phone, I get a 25 percent discount.” And the response he generally received was “O.K.” “It was the same conversation with the doctors as it was with the hospital. There was no negotiation whatsoever. Just standard procedure,” Mr. Villarreal said by e-mail.

The comments after the post suggest that Mr. Villarreal wasn’t bold enough, however. Apparently, many doctors and hospitals are willing to give 50% discounts.